Correlation Between DC HEALTHCARE and Malpac Holdings

Can any of the company-specific risk be diversified away by investing in both DC HEALTHCARE and Malpac Holdings at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining DC HEALTHCARE and Malpac Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between DC HEALTHCARE HOLDINGS and Malpac Holdings Bhd, you can compare the effects of market volatilities on DC HEALTHCARE and Malpac Holdings and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in DC HEALTHCARE with a short position of Malpac Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of DC HEALTHCARE and Malpac Holdings.

Diversification Opportunities for DC HEALTHCARE and Malpac Holdings

-0.6

Correlation Coefficient

DC HEALTHCARE  Malpac Holdings

Excellent diversification

The 3 months correlation between 0283 and Malpac is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding DC HEALTHCARE HOLDINGS and Malpac Holdings Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Malpac Holdings Bhd and DC HEALTHCARE is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on DC HEALTHCARE HOLDINGS are associated (or correlated) with Malpac Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Malpac Holdings Bhd has no effect on the direction of DC HEALTHCARE i.e., DC HEALTHCARE and Malpac Holdings go up and down completely randomly.

Pair Corralation between DC HEALTHCARE and Malpac Holdings

Assuming the 90 days trading horizon DC HEALTHCARE is expected to generate 3.55 times less return on investment than Malpac Holdings. But when comparing it to its historical volatility, DC HEALTHCARE HOLDINGS is 1.22 times less risky than Malpac Holdings. It trades about 0.02 of its potential returns per unit of risk. Malpac Holdings Bhd is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  78.00  in Malpac Holdings Bhd on September 27, 2024 and sell it today you would earn a total of  7.00  from holding Malpac Holdings Bhd or generate 8.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

DC HEALTHCARE HOLDINGS  vs.  Malpac Holdings Bhd

DC HEALTHCARE HOLDINGS

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in DC HEALTHCARE HOLDINGS are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, DC HEALTHCARE is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Malpac Holdings Bhd

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Malpac Holdings Bhd are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Malpac Holdings disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with DC HEALTHCARE and Malpac Holdings

The main advantage of trading using opposite DC HEALTHCARE and Malpac Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DC HEALTHCARE position performs unexpectedly, Malpac Holdings can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Malpac Holdings will offset losses from the drop in Malpac Holdings' long position.

The idea behind DC HEALTHCARE HOLDINGS and Malpac Holdings Bhd pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.